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EXHIBIT 10.2
PICK SYSTEMS
SECURED PROMISSORY NOTE
Due December 31, 2000
Irvine, California
$500,000.00 August 2, 2000
PICK SYSTEMS, a California corporation (the "Company"), for value received,
as described in the Asset Purchase Agreement attached hereto as Exhibit A,
hereby promises to pay to GENERAL AUTOMATION or order, the principal amount of
Five Hundred Thousand Dollars and no cents ($500,000.00) on December 31, 2000,
with no interest. Payments of principal on this Note shall be made in lawful
money of the United States of America at c/o General Automation, Inc. 00000
Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000, or at such other place as the holder
of this Note shall have designated by written notice to the Company as provided
in Section 8 hereof.
This Note is transferable by endorsement and delivery. This Note may be
prepaid, in whole or in part, at any time without payment of premium or penalty.
In case an Event of Default, as defined below, shall occur and be
continuing, the unpaid balance of the principal of this Note may be declared and
become due and payable in the manner and with the effect provided below.
1. EVENT OF DEFAULT
1.1 An "Event of Default" shall occur if:
(a) the Company fails to comply with any of its agreements
contained in this Note, including without limitation, default in the payment of
the principal on this Note and such failure or default is not cured within
thirty (30) days after notice is given to the Company;
(b) [Reserved]
(c) the Company pursuant to or within the meaning of any Bankruptcy
Law;
(i) commences a voluntary case;
(ii) acquiesces to the commencement of an involuntary case or
has commenced against it an involuntary case, which is
not dismissed within 30 days;
(iii) to the appointment of a Custodian of it or for all or
substantially all of its property; or
(iv) makes a general assignment for the benefit of its
creditors; or
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(d) a court; of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company in an involuntary
case;
(ii) appoints a Custodian of the Company or for all or
substantially all of its properties; or
(iii) orders the liquidation of the Company; and in each case
the order or decree remains unstayed and in effect for
sixty (60) days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal
or State law for the relief of debtors. The term "Custodian" means any receiver,
trustee, assignee, liquidator, or similar official under any Bankruptcy Law.
1.2 Acceleration. If an Event of Default occurs and is continuing, the
holder of this Note, by an instrument in writing delivered to the Company may
declare the principal on such Note to be due and payable immediately. Upon such
declaration, such principal shall be due and payable immediately. A holder of
this Note, by an instrument in writing delivered to the Company may, at any
time, direct the Company to rescind an acceleration and its consequences.
1.3 Cost of Collection. If default is made in the payment of this Note, the
Company shall pay the holder of this Note the costs of collection, including
reasonable attorneys' fees.
1.4 Other Remedies. If an Event of Default occurs and is continuing, the
holder of this Note may pursue any available remedy by proceeding at law or in
equity to collect the payment of principal on this Note or to enforce the
performance of any provision of this Note.
1.5 Waiver of Past Defaults. The holder of this Note representing not less
than sixty percent (60%) of the aggregate outstanding principal amount of this
Note may waive an existing default or Event of Default and its consequences.
When a default or Event of Default is waived, it is cured and stops continuing.
2. SECURITY INTERESTS. Any unpaid amounts due and payable on this Note shall be
secured by those accounts receivable of General Automation, acquired by the
Company ("Accounts Receivable"), as described in Section 1(a)(vii) and Schedule
1(a)(vii) of the Asset Purchase Agreement between General Automation and the
Company, executed on August 2, 2000 and attached hereto as Exhibit A. These
security interests and all UCC statements filed with regard to these security
interests shall immediately terminate and be fully extinguished upon full
payment to the holder, of $500.000.00, the principal sum due and payable on this
Note, plus costs of collection, if applicable.
3. REDUCTION OF BALANCE DUE. Commencing on August 1, 2000, and continuing until
this Note is paid in full, the principal balance due on this Note shall be
reduced by an amount equivalent to the amount of all Accounts Receivable
collected by General Automation and not paid to the Company ("Reduction"). Any
Accounts Receivable payments received by the Company prior to full payment of
the Note shall be remitted to General Automation and credited toward payment of
the principal balance of the Note. During the effective period of this Note, and
on a weekly basis, the Chief Financial Officers of General Automation and the
Company (the "Financial Officers") shall review relevant and applicable
financial reports and statements and mutually agree on the amount of each weekly
Reduction in writing, signed by the Financial Officers.
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4. RESTRICTIONS ON DISPOSITION. This Note shall not be transferable, except to
Comerica Bank.
5. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or through reorganization, consolidation, merger,
dissolution, sale of property or assets or any other voluntary act or deed,
avoid or seek to avoid the observance or performance of any of the terms or
provisions hereof to be observed or performed hereunder by the Company, but will
at all times in good faith, assist, insofar as it is able, in the carrying out
of all provisions set forth in this Note and in the taking of all other action
which may be necessary in order to protect the rights of the holder hereof
against dilution or other impairment.
6. NOTICES OF RECORD DATE, ETC. Nothing contained in this Note shall be
construed as conferring upon the holder hereof any voting rights or other rights
of a stockholder of the Company.
7. REMEDIES. The Company stipulates that the remedies at law of the holder of
this Note in the event of any default by the Company in the performance of or
compliance with any of the terms or conditions hereof are not and will not be
adequate, and that this Note may be specifically enforced.
8. NOTICES. Any notice herein required or permitted to be given shall be in
writing and may be personally served or sent by registered U.S. mail, return
receipt requested, by Fedex or by fax, to the following addresses:
If to General Automation, Inc.:
00000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx Xxxxxxxx, President
Fax: 000-000-0000
With a copy to:
Higham, XxXxxxxxx & Xxxxxxx, LLP
00000 Xxxxx Xxxx
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Fax: 000-000000
If to PickAX, Inc.:
0000 Xxxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
Attention: Xxx Xxxxxxxx, President
With a copy to:
Xxxxxxxxx Xxxxxxx
0000 00xx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Fax: 000-000-0000
Attention: Xxxx Xxxxx, Esq.
Any notice so sent shall be effective when received. Both the holder of this
Note and the Company may change the address for notices by giving written notice
to the other as herein provided.
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9. NO RECOURSE AGAINST OTHERS. No recourse for the payment of the principal on
this Note, or for any claim based hereon or otherwise in respect hereof, and no
recourse under or upon any obligation, covenant, or agreement of the Company in
this Note, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, shareholder, officer or director, as
such, past, present, or future, of the Company, any of its subsidiaries, either
directly or through the Company, any of its subsidiaries, whether by virtue of
any constitution, statute, or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof, and as part of the consideration for the issue hereof, expressly waived
and released.
10. AMENDMENT PROVISION. The term "Note" shall mean this instrument as
originally executed or if later amended or supplemented, then, as so amended or
supplemented.
11. GOVERNING LAW. This Note has been negotiated and executed in, and shall be
governed by and construed and enforced in accordance with the laws of the State
of California, without regard to its conflict of laws rules.
PICK SYSTEMS
/s/ Xxx Xxxxxxxx
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Xxx Xxxxxxxx
President
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